David R. Kotok quoted in…
Ignore the angry bleating of aggrieved creditors
Examining the legacy of the Greek retrofit
By Robin Wigglesworth - Financial Times - August 21, 2023
When a country hits a rough patch and its lenders start worrying about default, there are usually lots of warnings of near-eternal financial damnation.
The cries are particularly shrill when the country looks like it is plotting a sweeping or aggressive restructuring. “You’ll be locked out of the bond market for a generation!” etc etc, bondholders will protest.
But an interesting new paper by Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza examines the long-term impact of the legal ju-jitsu that Greece used to ram through its €200bn debt restructuring. And it provides a timely reminder that these warnings are often just gamesmanship that countries should discount or ignore.
". . . At Cumberland, we did not own and we will not own debt where a legal system can rewrite a contract, unless disputes (bankruptcy) can be adjudicated by a neutral court . . . We still believe in English law and American courts. If we lose those, we are all doomed." -David R. Kotok
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